Government intended to misdirect Canadians on F-35 costs: PBO Page

[start_gallery][end_gallery]Parliamentary Budget Officer Kevin Page appears as a witness at Commons Public accounts committee to discuss the F-35 Fighter Jet on Parliament Hill in Ottawa on Thursday. CP/Sean Kilpatrick

The government wanted Canadians to think the F-35 would cost less than they knew it would, according to Parliamentary Budget Officer Kevin Page.

Page appeared before the public accounts committee Thursday alongside officials from his office to answer MPs’ questions about the government’s procurement of the F-35 fighter jet. In particular, they asked him about the apparent discrepancy between overall program costing figures that were provided to cabinet for decision making purposes and those given to the PBO in March 2011 for his own analysis.

The spring auditor general’s report revealed the difference to be approximately $10 billion in operating, contingency and personnel costs.

Reporters asked Page afterward whether he thought the government wanted Canadians to believe the planes cost less than they really would.

“Yes,” Page said, after a pause.

The government and the Department of National Defence have maintained that those operating costs were not included in the figures given to parliamentarians in 2011 because they were already accounted for.

In April, defence minister Peter MacKay said the $10 billion “is money that we’re paying right now” because the department already pays for pilots and general upkeep of its existing CF-18 fleet. There would be no need, he said, to calculate those costs within the new acquisition. However, Page said Thursday, the costs to operate the F-35 will actually be higher.

He said the latest figures from the U.S. Department of Defence’s selected acquisition report on the F-35 shows that when compared to “recent fighters that are in play right now,” the operating and sustainment costs “are almost one third higher… per hour.”

“So, again, it highlights the importance of having a full definition of operating and support costs,” he said. “If we buy these planes, keep them in operation for 30 years, it’s the sustainment costs that are really going to eat up the budget.”

Later on, Dan Ross, DND assistant deputy minister for materiel, confirmed to the committee that indeed the F-35 would cost more to operate.

New Democrat MP Malcolm Allen noted that, as the PBO presented in his opening remarks, the U.S. now calculates the cost per flying hour for an F-35A — the model Canada is considering — to be around $31,000. Allen wondered whether that number “rings close” to that of a CF-18.

“We’ve always expected that the F-35, due to its complexity, would cost more,” Ross replied.

Allen was confused.

“So, what I’m hearing from you is that it’s going to cost more to fly the F-35 versus the CF-18, but yet you made an operating cost estimate that [Deputy Minister Robert Fonberg] has repeatedly said here… that the sunk costs are the same as the CF-18 as for the F-35,” Allen summarized.

He asked Fonberg for clarification, but when Fonberg deferred his answer back to Ross, Allen pressed. The deferral of the question was ruled allowable by Chair David Christopherson, but Allen chose to move on to a different question rather than hear from Ross again.

Fonberg also told the committee, under questioning from interim Liberal leader Bob Rae, who was sitting in on the committee as a guest, that it remains his department’s understanding that the PBO did not include operating costs in its analysis.

He said the same thing to Conservative MP Daryl Kramp.

“To the best of my knowledge we fully responded to the PBOs request,” Foberg said, adding that he had record of the correspondence between himself and the PBO.

“I don’t believe he raised issues with us on the substantive nature of the response,” Fonberg said.

Page did tell the committee that “it seems that some confusion has surfaced” on that point in the last few weeks. His office did include those costs, he said.

“I am here to confirm that it did,” he said. “The PBO estimate includes operating costs.”

He based that on the fact that his office followed what was set out in DND’s own costing guide – that operating costs include personnel costs; variable and step variable operations and maintenance costs of equipment; and total operating costs for facilities and materials consumed.

“Furthermore,” Page said, including lifecycle costs in an estimate is consistent with Treasury Board policy. “Given this, it seems difficult to understand how there could have been any confusion as to whether or not the PBO included operating costs within its estimate.”

For more iPolitics coverage of the F-35 procurement issues, click here.